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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Government securities in foreign ownership: exclusion of interest on FOTRA gilts

The exclusion for FOTRA gilts (IHTM04291) can also apply to certain payments etc of interest on the securities. Payments that qualify for the exclusion are

  • warrants or coupons for interest already received but not encashed at the date of the relevant chargeable event
  • apportionment of interest due up to, but receivable after, the date of the chargeable event
  • in the case of a trust, any interest payments already encashed but held - at the date of the chargeable event - by the trustees pending distribution in the administration of the trust. This is so even if no separate moneys can be identified as relating directly to interest on exempt securities.The exclusion for interest

does not apply to any warrants or coupons already encashed, or payments of interest already received, by the beneficiary in his lifetime, in connection with any chargeable event occurring after the encashment or the receipt. This is so whether he is the absolute owner of the exempt securities or a beneficiary under a trust.